Yet another US cedant has stated that they have increased their catastrophe reinsurance programme because of reduced pricing levels in the catastrophe reinsurance marketplace.
As alternative capital pushes rates down in this sector the market, a number of cedants have taken the opportunity to buy more coverage, often at a lower overall cost.
Kingstone Insurance, a subsidiary of multi-line regional property/casualty insurance holding company Kingstone Companies, also made other changes to its programme. It said it has reduced its ceding percentage to 55 percent from 75 percent in personal lines. The company has also non-renewed its previous quota share treaty on its commercial lines business.
Effective July 1, 2014, Kingstone entered into a one-year treaty, expiring on June 30, 2015, purchasing catastrophe reinsurance to provide coverage of up to $141 million for losses associated with a single event. The expired treaty provided for $90,000,000 of coverage.
Kingstone's maximum net retention from a catastrophe event is now $1,800,000 before tax. Personal Lines non-catastrophe losses are reinsured via a separate excess of loss treaty, leaving Kingstone with an individual loss retention limit of $360,000 pre-tax.
Barry Goldstein, chairman and chief executive officer of Kingstone, said: "We utilised our strengthened financial position to execute on our long-term strategy of reducing Kingstone's reliance on quota share reinsurance. This results in our retaining more of the business that we originate.
“As a result of reduced pricing levels in the catastrophe reinsurance marketplace, we were able to move forward with a program that provides a greater level of coverage to support our growth over the next year. We look forward to detailing the various treaties and the effects that the changes in terms will have on our financial results, in a call with analysts along with existing and potential investors next week."
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Kingstone Insurance, North America